Despite the pandemic’s enduring financial impact, global prosperity and wealth continued to grow throughout the crisis, both globally as well as in the United Arab Emirates, according to a new report by Boston Consulting Group.
The report, titled ‘Global Wealth 2021: When Clients Take the Lead’, reveals that not even a global crisis could stop the rich from getting even richer (and more people getting ‘rich’). Globally, global financial wealth soared last year, rising 8% to reach an all-time high of $250 trillion, according to the analysis by the strategic consulting firm.
In the UAE, the picture was no different, explained Mustafa Bosca, a Managing Director and Partner at Boston Consulting Group (BCG) “Although the Covid-19 pandemic has posed many challenges, the UAE’s wealth segment has proven to be resilient in the face of adversity, hence the growth it has recorded.”
Total financial wealth in the UAE stood at $600 billion at the end of 2020, 69% of which is coined as ‘investable wealth’, meaning that the assets are relatively liquid. In the coming five years, UAE financial wealth is expected to witness strong growth of 4% CAGR to reach $700 billion by 2025, a $100 billion increase from 2020.
Bosca: “The National Agenda has driven economic activity, empowering the country to operate in an economy that continues to become increasingly global. As a result, the UAE is placed in a favourable position for the years ahead.”
Financial wealth is defined by the authors as wealth such as cash and deposits; bonds, equities, and investment fund shares; life insurance and pensions; and other small asset classes.
Meanwhile, financial wealth of the Gulf Cooperation Council is forecast to reach $2.7 trillion in 2025 from $2.2 trillion in 2020, while total Middle East financial wealth is forecast to reach $6.3 trillion in 2025 from $4.8 trillion in 2020.
Boston Consulting Group’s report also shows the UAE’s changing landscape of the wealthy in the coming years, with the rise of the next-generation affluent and high-net-worth clients. These individuals, between 20 and 50 years of age, have longer investment horizons, a greater appetite for risk, and often a desire to use their wealth to create positive societal impact as well as earn solid returns.
According to another report from Boston Consulting Group released last year, women are a growing force in the wealth management space. By 2023, women in the Middle East are expected to see their combined wealth surpass the $1 trillion mark.